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Interest rates have risen 50%


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#1 nimblebear

nimblebear

    Welcome to the Dark Side !

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Posted 20 June 2013 - 08:47 PM

How much does someone want to bet that derivatives wont next be imploding across the board ? :blink:

The fall in the equity markets today, and recently in Japan, and in commodities, and gold aint seen nothing yet folks.

This guy 'gets it' ! Do you ? Yet ?

By Bill Holter (link here http://blog.milesfra...-have-risen-50)

A couple of months back the yield on the 10 year Treasury was 1.6% or slightly lower. In anticipation of the Fed “tapering” the yield, it rose to 2.32% yesterday and 2.43% this morning. In fact, yesterday alone the yield on the 5 yr. rose 6% (relative, not yield) in one day. That is THE biggest jump in the 5 year yield EVER. Another way to put this is that the 5 yr. Treasury lost more value yesterday than any day prior in history.

Something that no one has really talked about (before this is over they surely will) is that the Fed, as owner of more Treasury securities than anyone, got killed to the tune of $115 billion in May. Please keep in mind that their “equity capital” was only $65 billion. Gee, I wonder how this will be accounted for ???

Another area in fixed income that literally blew up last night was “funding debt” to the Chinese banking system. Their overnight rates between banks rose to 25%. (SHIBOR going crazy) Yes, 25% for overnight money…what does this tell you?

It tells me that the Chinese banks don’t trust each other…very similar to what happened here in the U.S. back in late 2008 when no one would lend to anyone else. They wouldn’t lend because they know that they themselves were cooking the books and squeezed for liquidity…so who else was in the same boat with them?

Please understand that the Chinese are sitting atop of a bigger real estate bubble than we ever had, higher interest rates will shut that down and cause “collateral” to evaporate.

PS.
IF NOBODY YET UNDERSTANDS WHAT A DERIVATIVE IS, and HOW THEY ARE AFFECTING OUR GLOBAL ECONOMY, they will be year end 2013.
OTIS.